David Kluft asks: “Can I be adverse to a company that was spun-off from another corporate client?”

• “In 2019, Company B was spun off from Company A. Company A sold Company B some patents, and Company A’s CEO even transferred over to Company B. A big law firm represented Company A during the process, and consulted with the Company A CEO, as the appointed constituent of Company A, before he transferred to Company B.”
• “A few years later, Company B sued an alleged patent infringer in federal court in MA, apparently over some of the same technology. The same firm appeared in the case for the defendant. Company B moved to disqualify the firm, alleging that prior to the spin-off, the firm had access to documents that contained information reflecting the value of Company B’s patents and commercialization plans – in other words, they saw confidential information of Company A that sort of became Company B’s confidential information later. Company B argued that the firm therefore owed Company B a duty of confidentiality, and this precluded their being adverse to them in this case.”
• “The Court disagreed for two reasons. First, the assignment of a patent does not transfer an attorney client relationship. Second, ‘courts have held that ‘representation adverse to a former client’s affiliate is proper unless there is a high degree of operational commonality and financial dependence between the affiliated entities.’ Therefore, ‘the fact that [the firm] represented [Company A] when the business division that would later be transferred to [Company B] was still a part of [Company A] does not, without more, transform [the firm] into [Company B’s] counsel during or after’ the spin-off. “
• “[David’s Note: The Court relegated to a footnote another interesting argument, which was that the firm still represented Company A, and Company A still owned 20% of Company B, so therefore the firm would be adverse to its own current client’s property. However, Company B was apparently unable to articulate why the firm’s separate representation of a minority owner of Company B would interfere with the firm’s ability to effectively represent its client in a lawsuit against Company B, and therefore present a conflict under Rule 1.7(a)(2). The opinion did not state whether anyone bothered to seek informed consent from Company A, or at least tell Company A what was going on].”
• Decision: here.

“Paul Weiss calls bid to disqualify law firm in sugar antitrust case ‘gamesmanship’” —

• “Law firm Paul Weiss urged a federal judge in Minnesota on Wednesday to reject a bid from Mondelēz and other major food manufacturers to disqualify the ​firm from defending Domino Sugar and its owner ASR Group in a group of ‌lawsuits over alleged price-fixing in the sugar industry.”
• “In its court filing, Paul Weiss denied the food manufacturers’ claim that the firm has a conflict of interest based on its earlier effort to represent the companies ​as plaintiffs in the same litigation.”
• “The law firm said the lead Paul Weiss ​attorneys who pitched representing the food companies have since left the firm. Paul ⁠Weiss criticized the move to disqualify the firm as ‘strategic gamesmanship at its worst and ​entirely without merit.'”
• “ASR and Domino in a separate filing on Wednesday defended Paul Weiss and urged the ​court not to disqualify the firm. ‘ASR/Domino would lose the attorneys who know their business, the industry, and the issues better than anyone,’ they said.”
• “The ​manufacturers in seeking to oust Paul Weiss argue that they provided confidential strategy and pricing ​data to the firm in 2024 when they were preparing to bring the case and the law firm was vying to represent them. Paul Weiss countered that the only information sent to the firm was ‘historical purchasing data from just one of the plaintiffs.'”

Feels like a potential plot point for Curb Your Enthusiasm: “Judge May Reassess Recusal When Social Relationship With Attorney Changes: Judicial Ethics Opinion 26-30” —

• “Where a judge’s social relationship with an attorney has changed over time, the judge has discretion to determine his/her ethical obligations based on his/her assessment of their current relationship, using the categories of Opinion 11-125 as a guide.”
• “For approximately two years, the inquiring judge maintained a ‘close social relationship’ with an attorney within the meaning of Opinion 11-125. They never had a ‘falling out,’ but instead found themselves less close as ‘time and life pass[ed] by.’ In recent years, they have not socialized together and are now mere acquaintances who exchange ‘happy birthday text messages and similar pleasantries.’ The judge asks whether social relationships should ‘be assessed based upon current circumstances’ or if an earlier classification of friendship must ‘remain indefinitely’ or for a specified timeframe.”
• “We previously addressed a circumstance where the judge had once been close personal friends with an attorney who was also his/her law partner; they had known each other since childhood. However, ‘both the professional and social relationships between the judge and his/her former friend completely terminated more than five years ago and the two are no longer on speaking terms’ (Opinion 15-45). We advised that a judge ‘must assess his/her current relationship with a lawyer who was formerly a close personal friend in order to decide if disclosure or disqualification is required in cases where the former friend is personally involved’ (id. [emphasis added]; see also Opinion 18-04[A] [discussing obligations with respect to recent public sector colleague and ‘current social acquaintance’]).”
• “We do not see any reason to require a different result here. Judges should have full discretion to assess the current status and overall context of their interpersonal relationships with attorneys to determine their ethical obligations, rather than relying on a classification of the relationship at some earlier point in time. Given the present reality and dynamics of human relationships, which may gradually evolve, unexpectedly shift, fade away or reawaken, we continue to leave this assessment to each judge’s discretion.”
• “Accordingly, the inquiring judge need not maintain an earlier classification of a ‘close social relationship’ with an attorney either for a set period or indefinitely, but instead has full discretion to determine his/her ethical obligations based on his/her assessment of their current relationship, using the categories of Opinion 11-125 as a guide.”